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M/s Nav Bharat Impex Versus Commissioner of Central Excise - Delhi-I

2015 (10) TMI 1293 - CESTAT NEW DELHI

Refund claim - Denial of CENVAT Credit - Export of exempted goods - in the case of the export under bond whether the appellant is entitled to claim refund of duty in terms of Rule 19 of the Central Excise Rules, 2002 or not - held that:- The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture of dutiable as well as exempted final products. If the exempted product .....

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f the respondent no. 2 to the petitioners to pay 10% even though printed books were exported as not legally sustainable. It is only in the event the petitioners does not export the printed goods and do not maintain the account as contemplated by rule 6 (2) the petitioner would be required to pay 10% on the sale price of the printed books not so exported. - no CENVAT Credit will be available in respect of the inputs used in the manufacture of exempted products, Rule 6 (6) (v) of the CENVAT Credit .....

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d the assessee is to allow the assesses to take CENVAT Credit on the inputs used in the export products and allow the assessee himself to adjust it for payment of duty on other products. If the adjustment is not possible, CENVAT Credit is refunded in cash. This appears to be the Scheme of Rule 5 of the CENVAT Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6 (6) (v) of the CENVAT Credit Rules, 2004 to the effect that the bar created by .....

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the CENVAT Credit Rules, 2004 and Rule 6 (5) of the CENVAT Credit Rules, 2002 is not relevant for the purpose of the present case. Rule 6 (1), 6 (2), 6 (3), 6 (4) of the CENVAT Credit Rules under CENVAT Credit Rules, 2002 as well as under the CENVAT Credit Rules, 2004 remains the same. As noted earlier the object and purpose of Rule 6 (6) of CENVAT Credit Rules, 2004 is to promote the policy of the Government that the benefit of duty paid on input is available as credit in respect of certain ex .....

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car which is dutiable is exported under bond without payment of duty there may be doubt as to whether credit on the inputs will be available, since the car is cleared without payment of duty under Rule 6 (5) of CENVAT Credit Rules, 2002. It could be argued that it covers only the exempted goods exported and not dutiable goods exported. In order to cover such a situation also, Rule 6 (6) of CENVAT Credit Rules, 2004 used the expression "excisable goods" which is wider to include both dutiable as .....

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the impugned order for denying their claim of refund under Rule 5 of CENVAT Credit Rules, 2004 for export of Menthol Crystals claim to be exported under bond in terms of Rule 19 of Central Excise Rules, 2002. The facts of the case are that the appellants are manufacturer of Menthol Crystal (BP/USP grade), Menthol Powder and Peppermint Oil classifiable under Chapter heading/sub-heading nos. 29061100 and 33012590 and after eight digit code tariff was introduced and classified them under proper he .....

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rystal is the main final product manufactured out of the raw material. Therefore, the case of Revenue is that the CENVAT Credit in balance as on 1/3/2008 is required to be reversed by the appellant as per provisions of Rule 11 of CENVAT Credit Rules, 2004. In these set of facts, the show cause notice was issued to the appellant that as per the notification no. 4/08 dated 1/3/2008, their final product has become exempt. Therefore, CENVAT Credit lying in their CENVAT Credit account should lapse an .....

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e was issued to the appellant to deny rebate/refund schemes filed by the appellants. The Adjudicating Authority denied rebate/refund scheme. Aggrieved from the said order appellant filed the appeal before the Ld. Commissioner (appeal) who allowed the rebate schemes but rejected the refund claim filed by the appellant under Rule 5 of the CENVAT Credit Rules for export of Menthol Crystal claimed to be exported under bond in terms of Rule 19 of the Central Excise Rules, 2002. Aggrieved from the sai .....

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also the case of the Revenue that Rule 6 (6) (5) of the CENVAT Credit Rules is not applicable to the goods which have been absolutely exempted from duty by notification issued under Section 5A of the Central Excise Act, 1944. He further submits that on the issue of the eligible to CENVAT Credit in their own case for the said period, this Tribunal in the case of Nav Bharat Impex Vs. Commissioner of Central Excise, Delhi reported in 2012 (285) ELT 582 (Tri-Del) has held that the appellant is entit .....

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.. Therefore, he submits that impugned order be set aside and the appeal may be allowed with consequential relief. 3. On the other hand, ld. AR reiterated the findings of the impugned order. 4. Heard the parties and considered the submissions. 5. The issue of entitlement to avail CENVAT Credit has been settled by this Tribunal in appellant's own case wherein this Tribunal has observed as under: We find that the adjudicating authority in para 18, had categorically come to the conclusion that .....

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osition in law. We find that the provisions of Rule 6 (2) specifically says that whenever a manufacturer of goods who manufactures the final product which are chargeable to duty as well as exempted, should maintain separate accounts for receipt, consumption, and inventory of input. In provisions of Rule 6 (3), it is clearly indicated that if manufacturer is not able to maintain such account, he can clear the exempted goods by paying amount equivalent to 8% or 10% of the value of the goods, The e .....

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ly, we find that the said provision very clearly talk about the manufacturer of exempted goods and there is no mention or indication that such exempted goods should be only considered as main product and the byproduct if any, cannot be a final product. The provisions of Rule 6 of CENVAT Credit Rules, 2004 clearly indicate that there has to be, manufacturing of products which are dutiable and exempted for application of this Rule 6 of CENVAT Credit Rules, 2004, and there is no dispute in this cas .....

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ovisions of sub-rules (1), (2), (3) and (4) shall not "(6) be applicable in case the excisable goods removed without payment of duty are either:- (i) ........... (ii) ........... (iii) ........... (iv) .......... Cleared for export under bond in terms of provisions of the (v) Central Excise Rules, 2002. The petitioners had manufactured both dutiable and exempted final product (packaged software and printed books respectively). The petitioner has taken credit on input used in the manufacture .....

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Rule 6 (3) (b) of the CENVAT Credit Rules, 2004. In our opinion this is wholly impermissible. The provisions as now contained in Rule 6 of the Credit Rules, 2004 were contained in Rules 57C and 57CC of the Central Excise Rules, 1944 as they stood prior to 1st April, 2000. From 1st April, 2000 till 30th June, 2001 similar provisions were contained in Rule 57AD of the Central Excise Rules, 1944. In the context of these Rules circular dated 8th November, 2001 of the Ministry of Finance was issued. .....

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ms of the provisions of Rule 13. In the new Rule 57 AD, it has been explicitly provide what was implicity in erstwhile rules 57C and 57CC. Further, the present rule 57AD (4) clearly goes on to show that the exempted goods are eligible to be exported under bond. To interpret otherwise will render the new rule 57AD (4) redundant. In view of the foregoing in this case the provisions of sub-rules 57 C (1) are satisfied as stipulated under Rule 57C (2) as well as Rule 57CC (6)1 and there was no need .....

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contemplated by rule 6 (2) the petitioner would be required to pay 10% on the sale price of the printed books not so exported. Even though Rule 6(1) of the CENVAT Credit Rules, 2004 provides that no CENVAT Credit will be available in respect of the inputs used in the manufacture of exempted products, Rule 6 (6) (v) of the CENVAT Credit Rules creates an exemption inter alia in respect of the excisable goods removed without payment of duty for export under bond in terms of Central Excise Rules, 20 .....

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bond in terms of the provisions of Chapter 5 of the Central Excise Rules, 2002, As the provision of Rule 6 (3) are not applicable to the facts of this case as the appellant has exported the goods under bond following as per the provision of Rule 19 of the Central Excise Rules, 2002. Therefore, we relied on the decision of Repro India Ltd. reported in 2009 (235) ELT 614 Bombay to say that refund claim cannot be rejected wherein Hon'ble High Court to Bombay has observed as under: The CENVAT Cr .....

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. used in the tractor may have suffered excise duty. The intention is not to export taxes but only to export the goods. If the inputs like engine going into the manufacture of export commodity namely tractors are subject to excise duty, the Indian manufacturer of tractors becomes internationally uncompetitive. This appears to be the object behind the Government enacting special scheme to ensure that the duty is not levied even on inputs going to the export products. Rule 6(6) (v) has been consci .....

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e CENVAT Credit Rules, 2004. With a view to achieve this object, the Central Government has specifically enacted Rule 6 (6) (v) of the CENVAT Credit Rules, 2004 to the effect that the bar created by Rule 6 (1) will not apply for goods exported. Considering the conscious and express provisions contained in Rule 6 (6) (v) for exported goods, to deny the permission to export under bond and / or to levy 10% on the value of the exported goods under Rule 6 (3) (b) on the footing that the printed books .....

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exempt by Notification dated 31st March, 2003. Rule 6 (6) (iii) relates to goods supplied to a unit located in Electronics Hardware Technology Park or Software Technology Park. Such supplies are exempt from duty by notification dated 31st March, 2003. Rule 6 (6) (iv) relates to supplies to United Nations or an International organization for their official use. These are exempt by Notification No. 108/95. Rule 6 (6) (v) relates to export under bond. Rule 6 (6) (vi) relates to gold or silver arisi .....

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context the Revenue itself has accepted that under the provisions of CENVAT Credit Rules, 2002 there was provisions for removal of exempted goods under bond but he same was not available with effect from 9th September, 2004 under CENVAT Credit Rules, 2004. We may reproduce Rule 6(5) of the CENVAT Credit Rules, 2002 which reads as follows: "(5) The provisions of sub-rule (1), sub-rule (2), sub-rule (3), and sub-rule (4) shall not be applicable in case the exempted goods are either:- (i) Cle .....

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nce (Department of Revenue) No, 108/95-Central Excise, dated the 28th August, 1995, number GSR 602 (E) dated the 28th August, 1995; or (vi) Cleared for export under bond terms of the provisions of the Central Excise Rules, 2002. We may reproduce Rule 6 (6) of the CENVAT Credit Rules, 2002, which read as under; The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either- (i) Cleared to a unit in a special economi .....

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umber G.S.R. 602 (E) dated the 28th August, 1995; or (v) Cleared for export under the items of the provisions of the Central Excise Rules, 2002; or (vi) Gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting." A perusal of the aforesaid Rules would clearly show that sub-rule (i) to (vi) are identical and the difference in Rule 6 (6) of the CENVAT Credit Rules, 2004 and Rule 6 (5) of the CENVAT Credit Rules, 200 .....

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